HOLLYWOOD, CALIF.
— Award-winning cartoonist Bill Melendez is as animated as any character he's ever drawn as he dissects one of his favorite videos, a Russian-British animation of Shakespeare's ''Romeo and Juliet.''

''Isn't that wonderful?'' he muses from behind his bushy Pecos Bill mustache, as he watches the tape in his homey Los Angeles office. But he is not talking about the animation, which is surprisingly primitive. Mr. Melendez is entranced by one thing - ''The story,'' he exults. ''The fact that they're doing a wonderful, classic story is more important than how well they execute it.''

This tolerance may seem surprising in a man whose name has been synonymous with top-quality animation for more than 50 years. But Melendez says simply, ''I belong to the old, old school that believes in story first and last.''

The Mexican-born animator began his career at age 21 in 1937 as part of Walt Disney's fabled crew. While there, Melendez worked on classics of the period, ''Bambi,'' ''Pinnochio,'' ''Dumbo,'' and ''Fantasia.'' After Melendez left Disney, he worked at Leon Schlesinger Cartoons, the forerunner studio to Warner Brothers.

(An animator colleague, John Hubley, also found Disney's style confining, and went on to become an independent animator. See story at right.)

At Schlesinger, Melendez animated what were later to become Warner Brothers staple characters: Bugs Bunny, Daffy Duck, and Porky Pig. Then he worked at United Productions of America, or UPA.

From there, Melendez worked in a variety of mediums - from feature films to television commercials. But today, he's best known for three decades of work on the animated ''Peanuts'' characters, producing more than 50 television specials. The classic ''Peanuts Christmas'' celebrates its 30th anniversary in animation with a television rebroadcast Dec. 6.

He has also created animated television specials for ''Garfield'' and ''Cathy'' cartoon characters. His work on commercials, feature films, and non-''Peanuts'' series and specials has won him numerous awards, including six Emmys and three Art Directors medals.

Melendez has been dubbed a traditionalist by colleagues and competitors alike for his commitment to the traditional single-cel animation technique, in which each cel is hand drawn and inked by individual artists.

He wears this label proudly, because, he says, regardless of new innovations that may come along to amplify the animator's work, the original drawing must still be done by an animator. ''Animators are artists,'' Melendez emphasizes, ''and there will always be a place for their contribution,'' no matter what technology evolves along the way.

What does he think of the new ''Toy Story'' movie, touted as the first to be completely animated by computer?

''Toy Story'' is ''trying to emulate live action, which is what Walt Disney was always trying to do. I believe animation should be more stylized, not just aping live action.''

In fact, the veteran animator is not averse to computer technology. ''What a wonderful tool. I'd like to use it for crowd scenes or explosions that take forever to draw.'' He is also working on a ''Peanuts'' CD-Rom. But he points out the computer is still ''a giant pencil.''

The increased use of high-tech animation doesn't concern Melendez as much as what he sees as the disgrace of today's animation industry - the lack of anything worthwhile to say.

''Today's industry is driven by greed,'' Melendez says, ''which means that even in the big-budget animated features, the money goes for big-name talent, not for story development.''

This issue is part of Melendez's larger concern with the treatment of animators and animation in the industry. He feels strongly that animators have always suffered from a lack of respect and says, without bitterness, that he feels even Walt Disney was quick to take credit for his animator's work and grossly underpaid them. ''We had to go on strike to get a decent wage,'' he says.

For this reason, Melendez has always worked hard to nurture individual talents. Independent animator Bill Littlejohn, who has worked for Melendez numerous times, says Melendez is the epitome of a producer as well an artist. ''He respects animators, lets them contribute and can accept their input.''

Leo Moran, who has been with Melendez for a decade, says in an industry that is competing with cheap labor overseas, Melendez fights to keep his Los Angeles-based studio busy with quality projects. ''Bill comes comes from the first generation of broadcasters who still feel the obligation implicit in the old term to 'broadcast,' or to sow a good seed,'' Moran says. He adds that Melendez worries because he thinks what is being broadcast now is not nurturing, it is destructive.

Al Pabian, who has worked for Melendez more than 25 years, agrees. ''Bill has always been committed to high-quality characters and story conceptualization,'' he says. ''He comes from the true 'golden age' of animation.''

Back in his front office, as he watches Romeo and Juliet touch hands, Bill Melendez leans forward. ''You should only put movement where it counts,'' he comments. ''There's no need to animate everything like crazy,'' like the ''the slapdash work'' he says he sees on Saturday mornings.

In the early days, he says, animation was for all ages. Now, he laments, ''animation has been relegated to children. Why should there be children's programming? Why can't there just be good programming?''